Motor vehicle warranties

On 1 December 2014, the Motor Dealers Act 1974 was replaced by the Motor Dealers and Repairers Act 2013. The Motor Dealers and Repairers Act has a different approach to warranties for vehicles. Warranties are now based on the consumer guarantees provided under the Australian Consumer Law (ACL).

The warranties in the Motor Dealers and Repairers Act apply to defective vehicles sold by licensed motor dealers. A defective vehicle is one which, when sold, was in such a condition, or had such a defect, that its supply breaches a consumer guarantee under the ACL.

Rectification orders

Trade qualified Fair Trading inspectors will be able to issue rectification orders to resolve disputes between consumers and dealers. Rectification orders are enforceable and will be able to be used as evidence before a court or tribunal. Failure to follow an order can result in disciplinary action being taken by Fair Trading against a licensed dealer or repairer.

Dealer guarantees

In addition to consumer guarantees under the ACL, or any express warranty for the vehicle, such as a manufacturer guarantee, the Act also provides a ‘dealer guarantee’. If a consumer has a complaint about a vehicle purchased from a licensed dealer, it is the consumer’s choice whether to pursue a claim under the dealer guarantee, the ACL or any express warranty for the vehicle.

The dealer guarantee requires motor dealers to repair or make good, at their own expense, any defective vehicles they sell. To ’make good’ means the vehicle must be repaired or remediated so that it is in a reasonable condition having regard to its age.

The dealer guarantee also extends to any subsequent purchaser of the vehicle within the limitation period, except for second-hand vehicles or if the purchaser is a licensed motor dealer.

Limitation periods

The limitation period for a dealer guarantee commences when the purchaser takes possession of the vehicle or the sale is completed, whichever happens first.

Limitation periods are expressed as a time period or a distance driven. The limitation period ends when either of these are first achieved.

New vehicles (other than motor cycles)

The dealer guarantee for a new motor vehicle which had driven less than 15,000 km when purchased is limited to 20,000 km after manufacture, or 12 months after purchase (less 1 month for each 2,000 km that the vehicle was driven before purchase) whichever occurs first.

The dealer guarantee for a new motor vehicle which had driven more than 15,000 km when purchased is limited to 5,000 km after purchase, or 3 months after purchase, whichever occurs first.

Second-hand vehicles (other than motor cycles)

The dealer guarantee for a second-hand motor vehicle which had driven less than 160,000 km and was less than 10 years old when purchased is limited to 5,000 km after purchase, or 3 months after purchase, whichever occurs first.

Motor cycles

The dealer guarantee for a new motor cycle which had driven less than 7,000 km when purchased, is limited to 10,000 km after manufacture, or 6 months after purchase (less 1 month for each 2,000 km that the vehicle was driven before purchase) whichever occurs first.

The dealer guarantee for a new motor cycle which had driven more than 7,000 km when purchased, is limited to 3,000 km after purchase, or 3 months after purchase, whichever occurs first.

The dealer guarantee for a registrable second-hand motor cycle which had driven for less than 30,000 km and was less than 5 years old when purchased, is limited to 3,000 km after purchase, or 3 months after purchase, whichever occurs first.

The dealer guarantee for an unregistrable new motor cycle is limited to 5,000 km after purchase or 3 months after purchase, whichever occurs first.

The dealer guarantee does not apply to:

a motor vehicle sold by a motor dealer at auction if a dealer’s notice specifying that the dealer guarantee does not apply is attached to the motor vehicle at the time of sale

a substantially demolished or partially dismantled motor vehicle that is purchased by the holder of a motor vehicle recycler’s licence

a motor vehicle sold by a motor dealer that is unregistered and, at the time of sale, requires substantial repair

incidental or accidental damage that occurred to the motor vehicle after the sale by the motor dealer and when it was not in the possession of the motor dealer

damage which occurred after sale and was caused by misuse or by negligence of the driver, or because the motor vehicle was used for motor racing or motor rallying

superficial damage to the paint-work or upholstery of a second-hand motor vehicle that would have been apparent on a reasonable inspection at the time of sale

the sale of a second-hand vehicle to which the prescribed defect notice (either dealer notices 6, 8 or 10) and inspection report was attached, including an estimate of the cost of repairing the vehicle. The purchaser of such a vehicle is allowed to recover the difference between the reasonable cost of repairing any defect specified in the notice and the amount estimated in that notice as the reasonable cost of that repair.